10
Chapter 2
Theoretical Framework
2.1 Brand
If all marketing activities must be wrapped into one word, the word will
show up is branding. The main objective for marketing activities is to get
the brand loyalty from customer. Without a brand, a product will only
become a commodity. Brand is product which is force the consumer to
give extra sacrifice to get it. Every brand is a product, but not all products
are a brand.
Brand is “a name, term, sign, symbol or design, or a combination of them,
intended to identify the goods or service of one seller or group of seller
and to differentiate them from those competitors. A brand is thus a product
or service whose dimensions differentiate it in some way from other
products or service designed to satisfy the same need. These differences
may be functional, rational, or tangible – related to product performance of
the brand. They may also be more symbolic, emotional, or intangible –
related to what the brand represents. ( Kotler, 2000 )
From all above explanation, we can take conclusion that brand is a logo,
name, trademark, and slogan to make differences between another
company and another individual in which they are sell. Consistency of
11
using a brand can easily recognize by consumer so can with easily will be
remembered by the consumer. So if the brand launched something new
consumer with easily can recognize it. In other word we can say that, a
brand has 3 important things:
1. Brand is describing about what is the product that a company sell.
2. Brand is describing about what activities that company doing.
3. Brand is describing about company profile itself.
A brand provides a series of promises that within about trust, consistency,
and hope. Thus, the brand is very important, both for consumers and
producers (in this case a company). For consumers, the brand is useful to
simplify the process of purchasing decisions and is a guarantee of quality.
In contrast to the company, the brand can help the effort to build loyalty
and sustainable relationships with consumers.
2.2 Loyalty
According to Aaker (1991), there are several levels of loyalty. Below are
the figure level of loyalty.
12
Figure 2.1 The Loyalty of Pyramid
Each level represents a different marketing challenge and a different type
of asset to manage and exploit.
The bottom loyalty level is the non loyal buyer who is completely
indifferent to the brand – each brand is perceived to be adequate and the
brand name plays little role in the purchase decision. Whatever is on sale
or convenient is preferred. This buyer might be termed a switcher or price
buyer.
The second level includes buyers who are satisfied with the product or at
least not dissatisfied. Basically, there is no dimension of dissatisfaction
that is sufficient to stimulate a change especially if that change involves
effort. These buyers mignt be termed habitual buyers. Such segment can
be vulnerable to competitors that can create a visible benefit to switching.
However, they can be difficult to reach since there is no reason for them to
be on the lookout for alternatives.
Commited buyer
Likes the Brand
Considers it a friend
Satisfied Buyer
with switching cost
Satisfied / Habitual Buyer
No reason to Change
Switchers/Price Sensitive
Indifferent ‐ No brand Loyalty
13
The third level consists of those who are also satisfied and , in addition,
having switching cost – cost in time, money, or performance risk
associated with switching. To attract these buyers, competitors need to
overcome the switching cost by offering an inducement to switch or by
offering a benefit large enough to compensate.
In forth level consists of those who are truly like the brand. Their
preference may be based upon an association such as symbol, a set of use
experiences, or a high perceived quality. Segments at this level might be
termed friends of the brand because there is an emotional/feeling
attachment.
The top level are commited customers. They have a pride of discovering
and/or being users of a brand. The brand is very important to them either
functionally or as an expression of who they are. Their confidence is such
that they will reccomend the brand to others.
2.3 Brand Loyalty
Brands introduce stability into businesses, help guard against competitive
imitation, and allow consumers to shop with confidence in an increasingly
complex world (Aaker, 1991). Once customers have made a decision
about a brand and its associations, they are often loyal to that brand,
continue to buy it in the future, recommend it to friends, and choose the
14
product over others, even those with better features or lower prices
(Assael, 1991). Brands are natural barriers to new competitors because
branding reduces consumer risks associated with the purchase of products
or services. Thus, they support premium prices and sustain increasing
revenue because of the consumer tendency towards long-term brand
loyalty (Ehrenberg et al., 1990).
Brand loyalty is a very important concept in marketing strategy. The
existence of the brand loyal consumers is needed, so the company can
survive. Loyalty can be interpreted as a re-commitment to make purchases
of products or services into a consistent preference in the future by buying
back the same brand despite situational influences and marketing efforts
that can lead to behavior.
Brand loyalty provides predictability and security of demand for the firm,
and it creates barriers to entry that it make difficult for other firms to enter
the market. Loyalty also can translate into customer willingness to pay a
higher price – often 20% to 25% more than competing brands. Although
competitors may duplicate manufacturing processes and product designs,
they cannot easily match lasting impressions left in the minds of
individuals and organizations by years of product experience and
marketing activity. In this sense, branding can be powerful means to
secure a competitive advantage. (Kotler, 2000)
15
Companies that have customer base that has a high brand loyalty to reduce
marketing costs because the cost to retain customers is far cheaper than
getting new customers. Brand loyalty can increase the purchase and to be
able to attract new customers because they have the belief that buying a
branded product at least to reduce the risk of disappointment. Another
advantages that can be obtained that the company can respond more
quickly to competitors' movements.
2.3.1 Importance of Brand Loyalty
According to Tepeci ( 1999 ), The advantages of brand loyalty are :
1. Continues profit. The advantages of customer loyalty are long-
term and cumulative. The longer a customer remains loyal, the
more profit a business can get from that single customer.
2. Reduce marketing cost. Business has to invest money to attract
new customers, such as advertising. For loyal customer, these
costs are eliminated or minimized.
3. Increase per-customer revenue growth. Customer spending
tends to increase over time. For example, a customer who
repeatedly stays at the same hotels becomes more familiar with
the hotel’s full product line, such as gift shop and banquet
16
rooms and that customer will be likely to sample other product
lines of the company which is helping the company achieve a
larger share of customer.
4. Decreases operating costs. For a loyal customer, the front desks
clerk does not need to spend time entering data into computer.
Loyal customer’s familiarity with the company’s product
makes them less dependent on its employee for information
and service, thus decreasing servicing costs.
5. Increase referrals. Satisfied customers recommended the
business to friends and others. Referrals are vital sources of
new customers who show up on the strength of a personal
recommendation tend to stay longer.
6. Increase price premiums. Brand loyal customers pay more for a
brand because they perceive some unique value in the brand
that no other alternative can provide, and they are less likely to
be lured away by discount.
7. Provides competitive advantage. As consumers become loyal to
a brand, they become less sensitive to a price increase. The
company can maintain a price differentiation over the
17
competition because of the product’s ability to satisfy their
needs.
2.4 Measurement of Brand Loyalty
2.4.1 Brand Reputation
Brand reputation refers to opinion of other that the brand is good
and reliable. Brand reputation can be developed through
advertising and public relations, but it also likely to be influenced
by product quality and performance. Creed and Miles ( 1996 )
found that reputation of a party could lead to positive expectation,
which resulted in the development of reciprocity between the
parties. If a consumer perceives that other people are of the opinion
that a brand is good, the consumer may trust the brand sufficiently
to purchase it. After the usage experience, if the brand at least
meets the consumer’s expectations, a good reputation serves to
reinforce the consumer’s trust.
Conversely, if a brand does not have a good reputation, a consumer
is likely to be more suspicious. As a result of heightened
awareness, they may be sensitized to any flaws that the brand may
have. This makes it more difficult for the brand to be trusted.
18
2.4.2 Company reputation
If a consumer perceives that other people are of the opinion that the
company behind a brand is known to be fair and just, that
consumer may feel more secure in acquiring and using the
company’s brand. This translates to greater trust in that brand (
Anderson and Weitz, 1992 ). By making scarifies and showing
concern for other channel members, some retailers and vendors
have developed a reputation for fairness within industry. When
customer perceive their reputation for fairness, they are more likely
to trust and loyal for the company.
2.4.3 Brand Competence
A competent brand is one that has the ability to solve customer’s
problem and meet their needs. Ability refers to skill and
characteristic that enables party to have influence within a domain
(Butler and Cantrell, 1984). All considered ability as an essential
element in influencing trust and loyal to the brand.
A consumer may find out about a brand’s competence through
direct usage of WOM communication. Once convinced that a
brand is able to solve their problem, a consumer may be willing to
rely on that brand ( Lau and Lee, 1999 )
19
2.4.4 Price Worthiness
Why are different customers willing to pay more or less for the
same product? Price image is important to retailers because it can
influence many of the perceptions that consumers from and the
decision they make (Hamilton and Chernev). Price serves as the
strongest loyalty driver (Ryan et al., 1999). Loyal consumers are
expected to be in the market for their particular brand often; in
some sense they need the brand. Because of their strong preference
for the brand’s attribute, consumer will choose the brand most of
the time regardless of price ( Krishanamurthi and Raj, 1991). In
other word, consumers with high brand loyalty are less price
sensitive (Cadogan and Foster, 2000).
Consumer not loyal to a brand should be quite sensitive to the price
of the brand in the choice decision because they have no
compelling need to buy this particular brand, the will be persuaded
to buy the brand only if its price is low enough. This is reflected in
high choice elasticity ( Krishanamurthi and Raj, 1991).
2.4.5 Repeat purchase
According to Oliver (1999), brand loyalty as a deeply held
commitment to rebuy or repatronise a preferred product / service
20
quality consistently in the future, thereby causing repetitive same
brand or same brand – set purchasing despite situational influences
and marketing efforts are having the potential to cause swithcing
behavior.
According to Knox and Walker (2001), With the exception of a
very few product categories, a major objective of marketing
strategy is to facilitate the process of consumers repurchasing a
brand through preference. The reason why repeat purchasing is
important to marketing management is simple: retaining customers
often requires less marketing resources than recruiting new ones
and, thus, is economically desirable.
Repeat purchase behavior is an axiomatic term which simply refers
to the extent to which consumers repurchase the same brand after
experiencing the brand. Since it is a purely behavioral construct, it
is simply measured as the number of times a given brand is
repurchased by a consumer in any given period of time (Ehrenberg,
1988). The consistent repeat purchase is one kind of Loyalty-Prone
behavior. The strength of behavioral brand loyalty is, therefore,
directly a function of the repetitive occurrence of purchase or
consumption behavior. The consumer establishes a systematic
biased response or habit simply due to the frequency of encounters.
Once the behavioral brand loyalty is strongly manifested by the
21
customer, it is very difficult to change the systematic bias away
from the brand.
2.5 Company Profile ( Asia Pulp and Paper )
2.5.1 Overview
APP is one of the world's leading pulp and paper companies and is
ranked one of the largest vertically integrated pulp & paper
producer in Asia, excluding Japan.
Its combined pulp, paper and packaging capacities in Indonesia
amount to over 7 million tones, using fiber from plantations and
wood residues of plantation development. APP currently has its
principal operations located in Indonesia, and markets its products
to more than 65 countries on six continents.
Over the years it has expanded its operations significantly, through
acquisitions and expansions in several of its pulp and paper mills.
It is APP's commitment to customer satisfaction that enables us to
grow our share in paper sales worldwide and broadening our
presence through marketing offices in many countries.
22
"Tradition and modernity go hand in hand" is key to the company's
success. We always esteem long term relationships with our
customers as a part of our eastern tradition whilst we are also eager
to embrace modern values as continuous innovation, efficiency and
punctuality. (http://www.asiapulppaper.com/)
2.5.2 Philosophy
1. Growth is a pre requisite for life and progress.
2. Human resources is the key success.
3. The satisfaction of our shareholders, potential investors,
employees, management, business partner, the government and
society is one of the highest priorities.
4. Preservation of the environment is an integral part of the
company’s operation and main concerns.
2.5.3 Vision
1. As part of APP, Sinarmas Tissue Business Unit vision is to
consistently accomplishments to improve quality of life of its
people
2. To provide satisfactory returns for its shareholders and further
strengthen the APP foundation to build an even better
tomorrow for its shareholder.
23
2.5.4 Mission
Our Mission is to become the 21st century’s number one tissue
manufacture company with the highest international standards in
the world, and with the strongest commitment to providing
superior value to customers, shareholders, employees, and the
community.
2.6 Paseo
2.6.1 Overview
Paseo is the brand that has been internationally recognize for its
premium quality tissue which brings hygienic, soft and natural
values for the whole family. Paseo color is naturally white and
gives a very clean and comfortable feeling.
2.6.2 Advantage Paseo Compare to Competitor’s
Product
1. Paseo is made from 100% natural fiber so it makes Paseo soft
and not easily tear.
2. In process, through 4500 Celsius heating so it makes Paseo
hygiene and free from germs and safe to use.
24
3. Not contain of bleacher so it will not make an allergic or
irritation for your skin.
4. Has international standard quality from ISO 9001.
2.6.3 Segmentation
1. Velvet
Advantage : Premium tissue with value added.
Target market : Women 25 – 35 years old , A SES class.
For her quality is the important thing.
Figure 2.2 Velvet Segmentation
2. Elegant
Advantage : Essential, high quality, and suitable for
everyday use.
Target market : Women 25 – 35 years old , A SES class.
For her quality is the important thing.
25
Figure 2.3 Elegant Segmentation
3. Smart
Advantage : Good quality with affordable.
Target market : Women 25 – 35 years old; B,C SES class;
housewife whom concern about affordable price and good
quality.
Figure 2.4 Smart Segmentation
2.6.4 Category
1. Facial tissue
Facial tissue is used for cleaning and wiping tissue for face.
26
Figure 2.5 Facial tissue
2. Bathroom tissue
Bathroom tissue is used for bathroom needs.
Figure 2.6 Bathroom tissue
3. Napkin tissue
Napkin tissue is used generally for party and dining.
Figure 2.7 Napkin tissue
27
4. Handkerchief tissue
Handkerchief tissue is used for cleaning and wiping tissue for
face. The difference from facial tissue is from the size.
Handkerchief tissue is smaller than facial tissue and can be
entered in to pocket.
Figure 2.8 Handkerchief tissue
5. Towel tissue
Towel tissue is generally used in kitchen. The benefit from this
category is has highly absorption level for oil and any dirt
things which usually happen at kitchen.
Figure 2.9 Towel tissue
28
2.7 Framework Theory
From two journal that writer used for this study, there are several variable
that influence brand loyalty. Writer decided take 5 variable which
influence brand loyalty. The variable that writer take for this research are :
1. Brand reputation
The reason why writer take brand reputation for this research
because brand reputation gave big contribution in Lau and Lee
(1999) result. That’s why writer take the brand reputation as one of
the factors that writer test for this research. Moreover, Paseo is
created with good reputation (with advantage compare to
competitor’s product) and with this research writer can get the
result is customer know the good reputation that APP created and
will lead to brand loyalty.
2. Company reputation
This variable is come from consumer’s trust in a brand link to
brand loyalty. Why writer take this variable even this variable was
not at revised model? Because on July 2010, Sinarmas faced
problem with Greenpeace and several big manufacture such as
Carrefour was stop to buy Sinarmas’s product. Moreover, the
publication for this problem is huge in society so they knew about
29
this problem. It was really give bad image in society and it can
decrease the intention to buy Sinarmas’s product (Paseo is one of
Sinarmas products) and the scare thing is customer did not want to
buy Paseo and loyal customer will switch the brand into
competitor’s product. That’s why writer want to study is company
reputation lead to Paseo brand loyalty.
3. Brand competence
The reason why writer take brand competence for this research
because brand reputation gave big contribution in Lau and Lee
(1999) result. That’s why writer take the brand competence as one
of the factors that writer test for this research. Writer want to see is
this Paseo competence is greater than competitor’s product. The
perception in society, tissue is like a commodity product which is
customer may not care about the brand. They need the competence
of tissue. But it is not true. Because there is tissue product which
contain chemical and using bleacher in process or it can make from
recycled tissue. That’s why writer want to study about this things
and related to Paseo’s brand loyalty.
30
4. Price
This variable is come from an empirical model for brand loyalty
measurement journal. The reason why writer take this variable for
this research because like already mentioned at chapter one, there
is tight competition between Tessa and Paseo. In this competition,
Tessa is playing in middle class but Paseo is playing in upper class.
Paseo’s price is higher than Tessa but even give higher price, Paseo
has added value that Tessa does not have it. That’s why writer
want to see is price one of the factors which is giving influence to
Paseo’s brand loyalty.
5. Repeat purchase
This variable is come from an empirical model for brand loyalty
measurement journal. This variable is giving the highest score in
that journal. That’s why writer take this variable as one of the
variables for this research. Writer want to see is customer repeat
purchase for the same product will lead customer to be loyal with
Paseo or not.
Top Related